Project X	Project Y	Project Z
Initial investment (CF0)	$78,000	$52,000	$66,000
Year (t )	Cash inflows (CFt)
1	$16,600	$27,500	$15,200
2	25,400	38,400	15,200
3	33,100		15,200
4	41,500		15,200
5			15,200
6			15,200
7			15,200
8			15,200

a. Calculate the NPV for each project over its life. Rank the projects in descending order on the basis of NPV.

b. Use the annualized net present value (ANPV) approach to evaluate and rank the projects in descending order on the basis of ANPV.

c. Compare and contrast your findings in parts

(a)

and

(b).

Which project would you recommend that the firm acquire?

a. Calculate the NPV for each project over its life.

The net present value for project X is

$nothing.

(Round to the nearest cent.)The net present value for project Y is:

$nothing.

(Round to the nearest cent.)The net present value for project Z is

$nothing.

(Round to the nearest cent.)

Rank the projects in descending order on the basis of NPV.

Rank the projects below. (Select from the drop-down menus.)

First:	Project Z X Y
Second:	Project Z Y X
Third:	Project Y Z X

b. Use the annualized net present value (ANPV) approach to evaluate and rank the projects in descending order on the basis of ANPV.

The ANPV for project X is

$nothing.

(Round to the nearest cent.)The ANPV for project Y is

$nothing.

(Round to the nearest cent.)The ANPV for project Z is

$nothing.

(Round to the nearest cent.)

Rank the projects below. (Select from the drop-down menus.)

First:	Project Z Y X
Second:	Project Z X Y
Third:	Project X Y Z

c. Compare and contrast your findings in parts

(a)

and

(b).

Which project would you recommend that the firm acquire? (Select from the drop-down menus.)Project

Z

X

Y

should be acquired since it offers the

lowest

highest

ANPV. Not considering the difference in project lives resulted in a different ranking based primarily on the unequal lives of the projects.